Correlation Between Intel and Globalfoundries

Can any of the company-specific risk be diversified away by investing in both Intel and Globalfoundries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Intel and Globalfoundries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and Globalfoundries, you can compare the effects of market volatilities on Intel and Globalfoundries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Intel with a short position of Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Globalfoundries.

Diversification Opportunities for Intel and Globalfoundries

0.24

Correlation Coefficient

Intel  Globalfoundries

Modest diversification

The 3 months correlation between Intel and Globalfoundries is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and Intel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Intel are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Intel i.e., Intel and Globalfoundries go up and down completely randomly.

Pair Corralation between Intel and Globalfoundries

Given the investment horizon of 90 days Intel is expected to under-perform the Globalfoundries. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.21 times less risky than Globalfoundries. The stock trades about 0.0 of its potential returns per unit of risk. The Globalfoundries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,919  in Globalfoundries on September 16, 2024 and sell it today you would earn a total of  469.00  from holding Globalfoundries or generate 11.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Intel  vs.  Globalfoundries

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globalfoundries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Globalfoundries

The main advantage of trading using opposite Intel and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Globalfoundries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Globalfoundries will offset losses from the drop in Globalfoundries' long position.

The idea behind Intel and Globalfoundries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.